When you ask CEOs why their company is different and better positioned, a common answer is, “We listen to our customers”. It’s a proper answer, but listening to your customers is neither unique nor enough.
Two weeks ago, I gave two presentations at Radar Summit 2013 in Stockholm called “Trust vs. terabyte” and “The path to innovation” where I talked about four strategies for collecting market intelligence. I’d like to share these strategies, but first a few words about Volvo.
When Barack Obama visited Sweden a couple of months ago, he got the opportunity to see some of the latest Swedish innovations, and he was particularly impressed by the new hybrid heavy machine engine from Volvo. It’s an engine that reduces fuel consumption by 80%.
In 2005, Volvo Group decided to be “The Prius of heavy machine engines”. At that time, no customers asked for hybrid engines for heavy machines. Since the project was initiated, its investment of hundreds of millions of dollars has been questioned internally, but Volvo had a clear mission to be the first company in the world with this new technology. To succeed with such a large, risky investment, you need management with the courage to dare to look beyond the next quarterly report. You need a CEO and a management team that aren’t replaced every third year with a focus on delivering short-term results only. I think (and hope) this engine has the potential to be a radical innovation in the heavy machine industry.
To retain competitive advantages as in the Volvo case above, companies need to utilize intelligence from new and different sources. From sources that might be outside their control and from sources they haven’t been used to using, or even been aware of. I will discuss how to collect intelligence from four different sources;
The traditional way to collect market intelligence is to interact with your customers. Sometimes we use the expression “customers first”, where you are taught to listen to and react to customer requirements. If Volvo 2005 had listened to their customers only, they wouldn’t have started the development of the hybrid engine. Their customers didn’t ask for it at that time. You and I wouldn’t for instance have a smartphone or software services for music and movie streaming. Listening to customers is not a differentiator anymore; it’s a commodity in all industries.
Conclusion: Listening to your customers is often about catch-up investment—it’s important, but it’s not enough. You need a strategy to collect intelligence from sources that are beyond your own control, out of your day-to-day business requirements and challenges.
Google has created a company culture that puts “employees first”. One concrete example is their rule of “70-20-10”, where employees are encouraged to work 70% of their time with core business, 20% with new things related to core, and 10% on things way beyond Google’s core business. Another example is how Google sets up its organization based on talents and not on business functions, where, as the second step, you try to allocate or recruit skills. Compared with most companies, Google does it vice versa. Stop saying “our people are our best asset” (among other replaceable assets like computers and inventories); please start thinking “our people are our company”.
Conclusion: If you are looking for pioneer innovations, you have to increase the involvement of your employees in the idea phase of new innovations—and you need the courage to believe in those ideas.
Looking at one of the success factors behind the smartphone and apps market, Apple cracked the code for getting access to a boundless amount of intelligence outside the Apple enterprise. They created a new ecosystem of technologies, behavior and incentive models to involve hundreds of thousands of developers around the world. I call this “communities first”. Most businesses are people businesses where ideas and innovations are created based on individual creativity, energy and incentives. In a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research, but should instead buy or license processes or inventions (i.e. patents) from other companies (so called open innovation).
Conclusion: To expand the source of intelligence outside your company’s payroll list, you need to be influenced by business models beyond the day-to-day business challenges. A good source of inspiration for most B2B industries is the consumer market.
Technologies and businesses are evolving to also collect intelligence from devices and “things” that are hooked to the Internet; let us call it “things first”. It includes data collection, from machines worth a million dollars to cows, cars and photocopiers, resulting in tremendous amounts of data. Collecting data from things goes beyond traditional transactional data as it can include geographical data (where), performance data (how), time data (when or when not), personal data (who), frequency data (how often). Separately, this data can tell us a lot, but it starts to get interesting when you collect, merge and analyze data from separate sources. It can reveal information about user behavior, preferences and challenges you weren’t aware of before. The Internet of things is high on the hype-curve at the moment and seen as an important differentiator. As technology evolves, things intelligence will be a commodity in most businesses too. So please don’t forget that competitive differentiators will continue to be ‘assets’ such as good relations and gut feelings.
Conclusion: Complexity doesn’t necessarily require more data and information to make intelligent decisions, even if human beings tend to think so. With access to petabytes of data, don’t forget that business is done between people, and people still do business with people they like and trust. Keep a healthy balance between “trust and terabyte”.